TY - JOUR
TI - The price of policy risk — Empirical insights from choice experiments with European photovoltaic project developers
UR - https://www.alexandria.unisg.ch/publications/209337
AU - Wüstenhagen, R.
AU - Luethi, S.
PY - 2012
N2 - Managing the transition to a renewable energy future is an important policy priority in many countries. Solar photovoltaic (PV) technology is expected to make an essential contribution, but due to relatively high cost, its growth to date has been largely driven by public policy, notably feed-in tariffs. Feed-in tariffs have been implemented in various countries, but with widely differing outcomes in terms of installed PV capacity. Previous research indicates that the level of policy risk may be an important driver for differences in renewable energy policy effectiveness. This paper suggests that project developers who make a decision between PV investment opportunities in different countries carefully weigh feed-in tariff-induced returns against a set of policy risks, and choose the country with the most favorable risk-return profile. This model is empirically tested by a stated preference survey among European PV project developers, consisting of 1575 choice decisions by 63 investors. The findings demonstrate that risk matters in PV policy design, and that a “price tag” can be attached to specific policy risks, such as the duration of administrative processes or uncertainty induced by an approaching capacity cap. Governments can build on these empirical results to design policies that will be effective in attracting private PV investment, while at the same time maintaining efficiency by providing an adequate compensation for policy risk.
PB - Elsevier B.V.
CY - Amsterdam
SN - 0140-9883
JF - Energy Economics
VL - 4
IS - 34
SP - 1001
EP - 1011
ER -
TY - UNPB
TI - The Price of Policy Risk – Empirical Insights from Choice Experiments with European Photovoltaic Project Developers
UR - https://www.alexandria.unisg.ch/publications/61086
AU - Luethi, S.
AU - Wüstenhagen, R.
PY - 2011
N2 - Managing the transition to a renewable energy future is an important policy priority in many countries. Solar photovoltaic (PV) technology is expected to make an important contribution, but due to relatively higher cost, its growth to date has been largely driven by public policy, notably feed-in tariffs. Feed-in tariffs have been implemented in various countries, however with widely differing outcomes in terms of installed PV capacity. Previous research indicates that the level of policy risk may be an important driver for differences in renewable energy policy effectiveness. More specifically, we suggest that investors who take a decision between PV investment opportunities in different countries carefully weigh feed-in tariff-induced returns against a set of policy risks, and choose the country with the most favorable risk-return profile. We empirically test this model based on a stated preference survey among European PV project developers, consisting of 1575 choice decisions by 63 investors. The findings of our study demonstrate that risk matters in PV policy design, and that a “price tag” can be attached to specific policy risks such as the duration of administrative processes or uncertainty induced by an approaching capacity cap. Governments can build on our empirical results to design policies that will be effective in attracting private PV investment, while at the same time maintaining efficiency by providing an adequate compensation for policy risk.
PB - Institute for Economy and the Environment, Univ. St. Gallen
ER -
TY - MGZN
TI - Effective Deployment of Photovoltaics in the Mediterranean countries: Balancing Policy Risk and Return
AU - Luethi, S.
PY - 2010
N2 - Although the Mediterranean region is blessed with abundant solar resources, photovoltaic energy currently represents a very small
share of power production. In Germany however, a much less sunny country, the photovoltaic (PV) industry is booming. This country
has become a front runner in the adoption of PV because of effective policy incentives. Based on a cross-case study analysis of the German,
Spanish and Greek PV markets, this paper investigates factors determining the effectiveness of PV policies. Our analysis shows that,
above a certain level of return, risk-related factors (such as policy instability and administrative hurdles) play a more important role in
influencing investment decisions than return-related factors (such as the level of a feed-in tariff).
PB - Elsevier Ltd.
JF - Solar Energy
SP - 1059–1071
VL - 6
IS - 84
ER -
TY - MGZN
TI - The Price of Policy Risk: Are European photovoltaik project developers willing to invest?
AU - Luethi, S.
PY - 2009
N2 - Policy risks need to be compensated by a higher level of support when designing policies effective in attracting photovoltaic investments. This is one of the key findings of a study recently conducted by the Swiss University of St.Gallen's Institute for Economy and the Environment. In particular, policy makers should be aware that long administrative processes and, to a somewhat lesser extent, policy risks related to the existence of a cap and a substantial number of unexpected policy changes, have a cost attached to it that will need to be reflected in a higher level of the feed-in tariff to attract photovoltaic project developers.
PB - Infothe Media Group
JF - InterPV
SP - 32
EP - 35
VL - November
ER -